Discussing the claim of tortious interference with contract recently in class I noted the difficulty plaintiffs face in persuading a court that a defendant’s conduct crossed the line between tough but legitimate competition and unlawful interference. I used to spend time on it in class–when I taught at Babson I employed Pennzoil v Texaco as fodder for moot court–but weaned it from discussion because after Pennzoil v Texaco the case law got pretty thin.
That may change if the Wachovia litigation has legs. Last Monday Citigroup announced it would buy Wachovia for $2.2 billion, or about $1/share, in a deal backed by the federal government in the face of Wachovia’s imminent collapse. On Friday Wells Fargo announced that it would buy Wachovia for $15 billion, or orver $7/share. Citigroup cried “foul,” claiming the FDIC encouraged Wells Fargo’s bid after helping broker Citigroup’s deal days earlier. Over the weekend Citigroup sought a court order enjoining the Wells Fargo deal, which Wachovia and Wells Fargo opposed. The parties raced between New York state court (in the person of a state trial court judge who heard arguments from his country home in Connecticut), the New York federal district court, and the New York Court of Appeals in inconclusive attempts to trump each others tactics, agreeing today to put all litigation on hold until Wednesday while they try to negotiate a resolution. It’s a high-stakes legal contest involving some of the country’s top litigators duking it out against the background of the most turbulent financial markets in over 70 years.